Slash Spending and the Economy Will Bloom
"'The economy' is not the recovery," Greenberg writes, "but a set of powerful on-going realities: a middle class smashed and struggling, American jobs being lost, the country and people in debt. . . . Voters are desperate for leaders who understand the scope of what is happening. . . . They want serious plans, not triumphalism about jobs reports." To Greenberg and other Democrats, "serious plans" to revive the economy presumably don't include dramatic cutbacks in the government's astronomical spending. But what if that spending -- projected to reach $3.8 trillion this year, $1.6 trillion of it borrowed -- is the very thing inhibiting economic growth? Keynesian economists and pundits have argued that what the economy craves is even more stimulus spending and government debt. But history suggests something altogether different. Writing last year in the Cato Policy Report, economists Jason Taylor and Richard Vedder showed that the great post-World War II economic boom was ushered in by the swift rollback of what had been the largest economic "stimulus" in US history. At the time, leading Keynesians cautioned that the abrupt withdrawal of federal dollars would plunge the economy into a new depression.